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Financing new energy creators

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Indiana Lawyer Focus

When attorney John Kirkwood sees a garbage dump, his mind not only starts wandering toward the renewable energy that could be produced at that site but also an expanding field of law that’s drawing more lawyers into the environmental fold.

These days, the mental images may be cornfields or municipal waste into ethanol, woody biomass into environment-friendly fuel, or wind recycled into electricity – but those are just the starting points for what lawyers say is an evolving and ever-expanding area of energy and environmental law.

Kirkwood’s foray into that world may start with those mental pictures, but it soon detours into what he’s spent a quarter century of his career practicing: municipal bonding and finance law, pivotal parts in the renewable energy picture that is getting more attention these days. He’s handled financing issues on projects like Lucas Oil Stadium, the Indiana Convention Center expansion, and Indianapolis Water, and the corn ethanol craze brought his background to the eyes of national and international companies.

Chairing Krieg DeVault’s Alternative Energy and Clean Tech practice group, Kirkwood is one of a growing number of attorneys statewide and nationally who’ve turned their attention to renewable energy and the financing of these types of projects. His firm represents three out-of-state companies that recently received millions in loan guarantees for renewable energy facilities.

Companies represented by other firms have similar legal minds on those projects, and they all say that the financing component of these projects is just as important to the environment as the projects themselves.

“That financing fits right in with everything going on in green energy and environmental law,” Kirkwood said. “After that corn ethanol revolution that was like a bolt of lightening sweeping across the country, we started debating whether making energy out of what we eat was really smart and the equity was pulled back. But that lull is over.”

Hoosier attorneys watching the renewable energy and environmental trends of these projects have been focused on new U.S. Department of Agriculture regulations that will put in place a funding mechanism. Lawyers in Indiana say that the new rules are expected to set standards that will make it easier to finance these types of projects, allowing community banks to lend money for financing rather than making it more difficult for companies to undertake these efforts.

That, of course, means a boost in the legal work of those in the new energy areas and more traditional transactional and financing fields.

“It’s pretty safe to assume that what people are looking for in these regulations is going to happen and will make it feasible for these large-scale renewable energy projects to happen more often,” said Stephen Dutton, an attorney with Barnes & Thornburg’s new energy group. “Financing overall has been such a problem for everyone, and this USDA financing will be a welcome addition to what’s been available. Having no national standard has made it difficult to predict what will happen in the future, and people can’t be sure that all of these biomass projects will be treated the same.”

The issue can be contentious, as one Indiana business knows because of a federal lawsuit it filed against the USDA last summer. The Claypool-based LD Biodiesel and Soybean Processing Plant, owned by Louis Dreyfus Agricultural Industries LLC (LDAI), filed suit against the agency last summer in the District of Columbia. The suit claims the facility’s funding was being unconstitutionally denied because the plant’s percentage of foreign ownership is more than 51 percent. The suit alleged that the USDA rules didn’t impose any citizenship requirement.

But now, that contentious financial issue in court is muddied by the USDA’s recent announcements that numerous renewable energy projects nationwide will be granted those loan guarantees. LD Biodiesel received about $1.4 million, but it’s unclear what impact that funding will have on the pending lawsuit. Attorney John Buckley Jr. in Washington, D.C., couldn’t be reached for comment on the suit or government investments, but the last docket entry for the suit was in November.

Those types of issues that may have sparked tension before are now destined for a different path, as the federal government is investing in these renewable energy projects.

The USDA in mid-January announced millions of dollars in loans in multiple states on a variety of projects, such as $15 million for biodiesel and cornstarch ethanol. Authorized under sections of the Farm Bill of 2008 and paid for in part through recent stimulus funding, one of the grants awarded entails loan guarantees to entrepreneurs who might want to invest in advanced biofuel production.

A total of 68 projects in 33 states received money – including four projects in Indiana totaling about $1.57 million in loans. The Indiana recipients are Louis Dreyfus Agricultural Industries; E Biofuels; T and M Limited Partnership; and Indiana Flex Fuels.

Eligible examples for the funding include biofuels derived from cellulose; crop residue; animal, food and yard waste material; biogas (landfill and sewage waste treatment gas); vegetable oil; and animal fat, according to the USDA.

Lawyers on those projects are scattered throughout the state and country, including Dutton and Kirkwood.

Three of Krieg DeVault’s clients have reaped $405 million in benefits from another section of the Farm Bill, according to Kirkwood. In rural western Alabama, Costaka received conditional word that it would receive $250 million to build and operate a 53-million gallon advanced ethanol biorefinery plant using woody biomass; Enerkem Corp. in Mississippi will receive $80 million to build and operate a biorefinery capable of producing 10-million gallons per year of biofuels from refining dried and post-sorted municipal waste; and INEOS New Planet BioEnergy in Florida will receive $75 million to construct and operate a biorefinery capable of producing ethanol and electricity.

A fourth biorefinery applicant in California, Bluefire Ethanol, was another of Krieg DeVault’s clients and is awaiting word on whether it will receive any loan guarantees. The firm is also working with other clients on similar measures, Kirkwood said.

“This is pretty historic,” he said. “The unique thing about all of this is that we lack guidance right now, and we’ve just been clumsy and awkward and what we’re doing didn’t fit the existing models in capital markets for funding.”

Kirkwood said his 25 years of experience taught him how to finance a project, whether it be a school or hospital, and these deals are similar in that regard. But it’s factoring in the environment, contract law, bank financing, intellectual property, and many other areas that make it so new and interesting, he said.

With about six to eight lawyers at his firm who are “new energy focused,” Kirkwood works with many others within other divisions who handle specific issues depending on the matter at hand. These issues have broadened his practice area nationally and internationally, Kirkwood said.

“Every one of these projects is built on a piece of dirt that has an environmental issue involved, but nationally there’s still only a small number of firms and a small fraternity of lawyers doing this work,” he said. “As Indiana has become home to more wind farms and our farmers have put those environmental twists on what they do, more federal support is going into this. Really, I see this as an engine for the firm that’s going to get bigger and bigger.”•

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  1. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  2. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  3. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  4. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  5. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

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